High-quality preparation is the key to trading successfully in international markets, whether your business is contemplating trading overseas for the first time or planning expansion into new territories. International expansion must be built on solid foundations.
In practice, that means ensuring that your business is ready for what lies ahead. In particular, does it have the skills, the experience, and the operating structure to pursue international opportunities? If there are gaps, it’s important to close them now rather than get caught out later. That might mean training for your sales team if you’ve only operated domestically until now or a reorganisation of the business so that it’s set up to embrace the opportunities that lie ahead. It might even mean recruiting new people into the business.
Humility and honesty are important attributes at this early stage. It makes sense to look for support to give the business the best chance of success. There’s nothing wrong with being realistic about what’s possible – for example, China might be the biggest market for your product but it might also be one of the most complex markets to break into. Maybe a venture closer to home could be a stepping stone.
Equally, it’s vital to recognise, right from the start, that trading internationally comes with a significant regulatory and compliance workload. Finding an exciting market for your product overseas – or a valuable new international supplier – will be pointless unless your business is able to make the most of the opportunity. This won’t be possible unless you can navigate a path through the paperwork of international trade.
Understanding the red tape
For that reason, getting a handle on the basics of trade compliance is a crucial foundation stone as your business pursues its international ambitions. For example, you’ll need an Economic Operators Registration and Identification (EORI) number to trade internationally. You’ll also need to understand which commodity codes apply to your products; these are the codes that customs and excise authorities all around the world use to work out which tariffs and duties apply on imports and exports of goods.
Without this documentation in place, your business won’t be able to move goods or services into or out of the UK. Getting the basics right at the beginning can prevent significant problems later – you can avoid goods being held up at the border or paying too much in duties.
Similarly, understanding the ‘incoterms’ system – a set of internationally recognised trade terms used in contracts – will ensure that you’re ready to deal with customers and suppliers in international markets. These terms set out who’s responsible for key elements of shipping and delivery, so any business trading internationally needs to get to grips with them.
Bear in mind too that the rules of international trade can change. Most obviously, many UK businesses that have been trading in the European Union for many years, with no concerns about paperwork, duties, and tariffs, are now having to learn new systems. Even experienced businesses need to stay on top of the basics.
Protect your Intellectual Property
Depending on the nature of your business and the markets that you’re targeting give some early consideration to your intellectual property protection. In certain markets, where imitation and ‘passing off’ are common problems, trademarking your goods or seeking copyright protection, may be vital to protect your future sales and the integrity of your products and services. You also need to make sure you’re not infringing IP held by competitors in other markets.
Acquiring this preliminary knowledge isn’t difficult, but it may require some investment of time and resources. The key is that everyone relevant in your business should be ready for the challenges of international trade before you embark on an expansion strategy. That way, as you identify the best opportunities, you’ll be ready to execute them immediately.
Think of this first stage of international trade as an investment into the future of your business – and be prepared to make that investment each time you contemplate working in a new market. You may be able to standardise the preparation process, so you have a template for approaching new markets, but every country comes with its own idiosyncrasies and challenges.
Key action points:
- Identify the skills gaps in your business that may hinder your international trade ambitions. Training and recruitment can close these gaps.
- Learn the basics of international trade regulation and compliance. Apply for an EORI number, if necessary, identify all relevant commodity codes for your business, and find out about incoterms.
- Build a template for international expansion. Set out a framework your business can implement each time it addresses a new market.
- Identify key providers that can help you with this foundational work. Which partners can help you map out everything your business needs to do and work with you to meet these challenges?
- Explore what IP (intellectual property) you should/can protect for the markets you’re entering. Look at the International IP service for some initial insight.